High electricity prices to cut Germany’s renewables support by €4.2 bln – BEE

Falling costs for renewable energy support will bring significant relief to Germany’s federal budget, the country’s Renewable Energy Federation (BEE) has said. Support costs related to Germany’s Renewable Energy Act (EEG) are projected to be 4.2 billion euros lower than originally planned for this year, said BEE head Ursula Heinen-Esser in a statement. 

“The very strong effect for 2026 is mainly due to the strong rise in electricity prices, caused by the still high share of gas in our power mix,” Heinen-Esser said. She added that high fossil fuel prices were expected to keep electricity prices elevated also in the future: “The fossil price crisis is not a temporary one, but will flare up again with every new geopolitical conflict.” 

At the same time, support levels for renewables are set to go down as old, costly support contracts gradually expire and electricity prices remain high. Under the EEG, operators of wind and solar power installations are guaranteed a minimum price for their electricity for 20 years, with the state covering the difference when market prices drop below the agreed level of remuneration. Since 2022, these payments are covered by the federal budget instead of a surcharge on consumers’ power bills. 

Support levels were particularly high in the energy transition’s earlier years, from 2000 to the early 2010s, because installation costs were far higher then and since have dropped significantly. A recent analysis commissioned by the North Rhine-Westphalia renewable energy association LEE NRW found that the support for new wind and solar power installations will cost Germany only a small fraction of what the state spends on existing ones.

The German government plans to halt or reduce support for certain categories of renewable energy sources, arguing that many projects would now be economically viable without subsidies. Economy minister Katherina Reiche has justified the planned cuts by pointing to the burden on the budget. The EEG must be overhauled by the end of 2026 to meet new EU state aid rules. The renewable energy industry, civil society groups, and lawmakers across party lines have warned, however, that the measures planned by the government could throttle the pace of expansion and put capacity targets at risk.

Power prices should be kept stable and support costs as low as possible, the BEE leader said. “This can only happen through a growing share of renewables in the grid and more storage.” The government must make investments easier to plan, reduce financing costs and improve flexibility and infrastructure use through digitalisation, Heinen-Esser said, adding that the savings in renewables support should be used to cut the electricity tax for households.